- Select two or three funds that would be most attractive for the following investors: -...

- Select two or three funds that would be most attractive for the following investors:
- Newlyweds who plan to invest $100 per month in high-risk fund and $50 per month in a moderately risky fund.
Discussion: What funds would you recommend and why?

Solutions

Expert Solution

These are following fund I would like to recommend

Pimco Total Return PTTAX: This fund is managed by Bill Gross who has a reputation in the fixed income world. In the fixed income market, he has a good long-term track record. The total value of the asset is around $263billion. The net annual expense ratio for A share is 0.85% and for C share is around 1.60%. Pimco Total Return (PTTAX) has a capable management team with extensive experience in fixed income. I will recommend this fund for $50 per month since it comes in the moderate risk category.

Vanguard 500 Index Investor Fund (VFINX): This is inexpensive if you wish to compare with other actively managed stock funds. This fund also provides a good tax efficiency since the portfolio turnover is low at around 4%. This a passive index fund and tracks the S&P 500 which means they primarily invest in large-cap stocks. Total asset value around $111 billion and the net annual expense ratio is 0.17%. This fund will be good for $100 since the fund primarily invests in large caps it is high in risk.

jeff jeffy answered 1 year ago

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